Report on the Investigation into Breaches of the Elections Act in the Municipality of the County of Richmond Introduction Audits and investigations conducted by the Ombudsman, Grant Thornton and the RCMP in the summer and fall of 2016 alerted Elections Nova Scotia to potential violations of the Elections Act (the “Act”). In October 2016 the Chief Electoral Officer (CEO) commenced an investigation. This is a report on the findings of that investigation and actions taken as a result of those findings. Acronyms CAO Chief Administrative Officer CEO Chief Electoral Officer ENS Elections Nova Scotia EDA Electoral District Association The Act The Elections Act The Municipality The Municipality of the County of Richmond Background ENS first became aware that the Act may have been breached through Nova Scotia Office of the Ombudsman’s investigation of the expenditure of public funds in relation to travel and related activities by the elected officials and the staff of the Municipality of the County of Richmond (the Municipality). ENS reviewed the Ombudsman’s Consultative Report dated September 29, 2016, the report on the forensic audit conducted by Grant Thornton dated September 19, 2016, and a copy of an email sent by the Warden Steve Sampson in April, 2014 and forwarded to ENS on October 27, 2016. The contents of these led ENS to believe that funds of the Municipality were used to reimburse a number of the councillors and the Warden for political contributions made for a fundraising event held by the Cape Breton-Richmond Liberal Electoral District Association (EDA) on May 23, 2014. The Ombudsman’s Final Report dated November, 2016, on page 23 states: Political Contributions During the course of this investigation, Ombudsman Representatives were informed that the Municipality reimbursed some Councillors for the cost of participating in a partisan political event. A municipal re-imbursement to any person for costs associated with a political party fundraising event may be a violation of the Elections Act (The Act). 1 Report on the Investigation into Breaches of the Elections Act in the Municipality of the County of Richmond _________________________________________________________________ Section 236, sub-sections 5, 5A, and 9 of the Act read as follows: (5) No organization shall make a contribution to a registered party, electoral district association, candidate or registered third party. (5A) No organization shall purchase tickets to, or otherwise pay any amount to participate in, a fundraising event for a registered party, electoral district association, candidate or registered third party (9) No individual or organization shall reimburse, directly or indirectly, any other individual, including an employee, for a contribution made by the individual or employee. Ombudsman Representatives were informed that the former Warden sought input from Councillors via e-mail as to their support for participation in a fundraising event, which was a recognition dinner for provincial politicians. While the Warden stated there was unanimous consent, several Councillors indicated during interviews that they did not in fact agree. Those Councillors stated that tickets were provided by the former Warden and they were informed that they could claim the cost of the $50 ticket price from the Municipality. ENS reviewed the Grant Thornton report titled “Municipality of the County of Richmond Travel and Expense Claims Investigation” dated September 19, 2016, available through the Municipality’s website. ENS found in the report: From the Executive Summary on page 7, point 17b: We identified 7 instances (in total $300) where councilors claimed for reimbursement expenses perceived to be political donations or fees for attending political party event. From page 18, point 59: From our review of the Expense Claim forms and supporting documentation we were unable to determine whether or not some individual expenses should be classified as either personal or business related because either the supporting documentation provided was insufficient to make the determination or there was no supporting documentation provided at all. For example, a political party expense made by councilors relating to a Liberal party event was claimed. Fees for attending the political party event may be considered either a political donation and/or attendance to a political event. From page 24, point 111: Attendance of Political Party Event/ Political Party Donations- We identified 7 instances (in total $300) where Councilors claimed for reimbursement expenses perceived to be political donations or fees for attending political party event. On October 27, 2016 ENS received an email written by Victor David. This email was also sent to Jaimie Baillie, leader of the Progressive Conservative Association of Nova Scotia. The email contained a PDF copy of an email sent by Warden Steve Sampson on April 28, 2014 at 12:59 pm to the nine other sitting councillors for the Municipality. The content of 2 Report on the Investigation into Breaches of the Elections Act in the Municipality of the County of Richmond _________________________________________________________________ the email was as follows: Hi Everyone : On Friday,May 23rd the Cape Breton-Richmond Liberal Association are recognizing the achievements of Premier Stephen McNeil and Honorable Michel Samson. The event being held at the Louisdale Parish Hall will be a combination of tribute and roast and extremely light on the "political" aspect as far as party politics is concerned. Aside from party faithful there have been requests from business and organisations to purchase tickets. I have been approached by three coucillors asking if the Municipality would consider purchasing a table for the event, which is $50.00 per ticket ( Includes buffet meal ). As a municipal unit we cannot contribute to a political party as election rules indicate however could reimburse individual councillors who submit proof of ticket purchase .I am prepared to support this initiative but at only "unanimous consent " of council . Your constructive critique is appreciated !!!!!!!!! Steve Sampson The Act sets out the rules governing fundraising activities and contributions in Sections 234 to 258. The most common fundraising activity is a fundraising dinner. The purchase of tickets to attend these events is restricted to people whose primary residence is in Nova Scotia. A person can buy multiple tickets using their own funds. They can give the tickets away to anybody they wish, resident or not of Nova Scotia. It is important to note that an organization is not permitted to purchase tickets directly or indirectly. Fundraising events have costs associated with running the event and they must be accurately documented. These costs are divided by the number of participants to determine the cost per participant. The political contribution provided by the participant is the ticket price less the average cost of the event per participant. These political contributions are eligible for a tax receipt issued by the registered party to the purchaser (not the user) of the ticket upon approval by the CEO. There is one exception to this rule for the spouse of the purchaser who may claim the tax receipt for one ticket personally. On December 17, 2014, Marney Bentley, Deputy Executive Director of the Nova Scotia Liberal Party, submitted a Statement of Fundraising Event Revenue and Expenses (Form 5) to request authorization to issue tax receipts for this event. This form, as prescribed under the Act, was signed in the place denoted for the Official Agent, by the Treasurer of the EDA, Jason Martell, on September 4, 2014. Details of the form submitted to ENS indicated that there were 211 tickets sold at $50 each to 154 individuals. Based on the costs of the event outlined in the Form 5, the amount of the political contribution eligible for a tax receipt was $14.96 for each ticket purchased. The CEO authorized tax receipts for $14.96 to be issued for each ticket purchased. The form also listed the names, addresses, cost of the tickets purchased and the amount of the tax receipt to be issued to each purchaser of tickets. Each of the nine councillors and the Warden were listed as purchasers of tickets for the event. 3 Report on the Investigation into Breaches of the Elections Act in the Municipality of the County of Richmond _________________________________________________________________ This following table indicates the number of tickets purchased by members of the Municipal council as listed on Form 5: District Councillors in 2012 Number of Tickets Purchased District 1 Victor David 1 District 2 Rod Samson 1 District 3 Malcolm Beaton 1 District 4 Alvin Martell 1 District 5 Shirley MacNamara 1 District 6 Brian Marchand 3 District 7 Gilbert Boucher 1 District 8 Steve MacNeil 1 District 9 Steve Sampson (Warden) 2 District 10 Gail Johnson 1 Investigation Based on review of the Ombudsman’s report, the Grant Thornton forensic audit, and the email received, the CEO believed that there may have been an offence under the Act. On October 26, 2016 he launched an investigation under the authority of sections 4(p) and 287 of the Act and sent notices of investigation to the nine councillors, the Warden, the Chief Administrative Officer of the Municipality, the Treasurer of the Liberal Electoral District Association and the Executive Director of the Nova Scotia Liberal Party (NSLP). ENS investigators interviewed Jason Martell, (the Treasurer of the EDA and the acting Chief Administrative Officer for the Municipality), each of the councillors and the Warden in Port Hawkesbury on November 28th and 29th. Investigators interviewed Warren Olsen, the former CAO of the Municipality, on December 6, 2016 by phone. ENS also received documentation of the reimbursement from the acting CAO of the Municipality, Jason Martell, on December 13, 2016. Based on the interviews held, ENS found: each of the interviewees to be forthcoming with their responses and cooperative with the investigators; eight of the nine councillors confirmed their attendance at the fundraising event; and, two of the councillors denied they personally purchased tickets.